Flight costs $80… but the overweight luggage costs $180, and we hope you packed a sandwich. Budget airlines like Spirit and Frontier are (in)famous for low prices, zero frills, and pricey add-ons. They rebounded from the pandemic quicker than legacy airlines because their primary customers — thrifty vacationers — returned to airports before business travelers. Now America’s two budget behemoths are tying the knot: Frontier and Spirit agreed to a $6.6B merger, creating what would be the fifth-largest US airline: #FrontSpirit (real name TBD). Yesterday Frontier’s stock rose 3% and Spirit’s soared 17%.

• Big plans: The companies said the merger would result in more cheap flights in underserved areas, 10K new jobs by 2026, and no layoffs.
• Bad PR: Yesterday morning Frontier canceled 20% of its flights because of tech issues — not a good look when you’re marketing more flights.

Battling the Big Four… by adding one more. The Frontier-Spirit deal is the latest in a long line of airline mergers: American, Delta, United, and Southwest were formed from 10 airlines and make up 80% of US air traffic. #FrontSpirit would command only 10% market share, but it could face a tough path forward:

• President Biden wants to boost airline competitions to ensure inexpensive, transparent travel. Although the merged companies would compete with big airlines, analysts say it’ll squeeze out smaller budget airlines like Breeze and Avelo.
• Last year the DOJ blocked a partnership between American Airlines and JetBlue, even though it wasn’t even a merger. The last US airline merger was Alaska and Virgin’s combination in 2016.

Honey & Berries… a match made in swipe heaven. Yesterday, Bumble made its first-ever acquisition with quirky five-year-old French dating app Fruitz. ICYMI, Bumble is the popular dating app where women make the first move. Bumble’s already in some European countries, but the US and Latin America still make up more than half its users. Meanwhile, Bumble’s other dating app, Badoo, has more than 300M users worldwide. With Fruitz, Bumble is doubling down on its Euro reach.

• Cherry-picking: Users are shown profiles based on which fruit icon they pick. Each fruit = a relationship type (think: watermelon for friends with benefits, cherry for long-term commitment).
• Choose your perks: Like most dating apps, Fruitz is free but offers premium paid features. For example: The “pollen” add-on shows profiles closest to you.
• Bumble’s sales jumped 24% last quarter to 200M thanks to extra paid users.

Financial stability > ship stability… The pandemic has influenced younger generations to value financial stability over serious relationships. Only 1 in 10 Gen Zers says they’re “committed to being committed.” Millennials still make up the majority of app users, but in saturated markets like the US, new growth has been hard to come by. Now:

• Last quarter Bumble saw its first user-growth decline since going public, as swipe madness cooled in the US.
• Bumble can leverage Fruitz’s ability to reach Gen Z where it’s seeing “rapid growth” in less saturated countries like in Belgium, France, Spain, Switzerland, and the Netherlands.

• Saga: Spotify's CEO apologized to employees for Joe Rogan's use of racial slurs in previous podcast episodes, but said he wouldn’t pull him from the platform. Rogan was already under fire for Covid misinfo.
• Peddle: Peloton shares soared on rumors that Amazon and Nike might consider buying the struggling fit-tech company. Peloton’s value has plunged on PR nightmares and falling demand for its spin bikes.
• Payback: Swedish price-comparison site PriceRunner said it’s suing Google for $2.4B, alleging that the US search giant prioritized its Google Shopping product over competitors’. The EU had already fined Google $2.7B over the same issue in 2017.
• Spidey: Toy maker Hasbro’s sales last quarter crushed expectations, jumping 17% on demand for “Spider-Man” and other movie toys. But shares fell after the company said rising transportation costs could hurt profits.
• Meaty: Tyson doubled its profit last quarter as meat demand held up despite rising prices. This year the chicken-nugget icon said it plans to invest $2B to boost production and automation.

• Earnings expected from: Pfizer, BP, Coinbase, Chipotle, Lyft, Peloton, Warner Music Group, Sysco, Thomson Reuters, and S&P Global

Authors of this Snacks own shares of: Alphabet, Spotify, Amazon, Match, and Delta

ID: 2028407